Rural drivers may get fuel discount

MOTORISTS in remote rural areas could be given a discount on the amount they pay for fuel, under radical new plans being considered by the government.

Treasury Chief Secretary Danny Alexander said he was "already taking steps" to put a fuel duty discount scheme in place for remote communities, where prices are highest.

He said the move - coupled with the "fuel duty stabiliser", which is also being considered - was more likely than a cancellation of the planned increase in fuel duty, due to take effect in April.

The fuel stabiliser would peg fuel duty to the price of oil, so that when the price per barrel goes up the proportion of tax goes down and vice versa, maintaining a steady price for consumers.

Mr Alexander's comments yesterday came as the average price of petrol edged towards 6 a gallon, or 1.32 for a litre of unleaded. Some petrol stations are already charging 1.40 a litre.

Mr Alexander said: "We as a government are looking at the idea of the fair fuel stabiliser, as the Prime Minister has been saying.

"It's a complicated idea and it's difficult to see precisely how we achieve it, but it's something that we are looking at very carefully to see if we can reduce the burden of fuel duty.

"We are already also taking steps, and we are the first government that's done this, to put in place a fuel duty discount scheme for remote communities where the prices are absolutely highest, something previous governments refused to do."

The Scotsman understands that the Treasury is actively considering the scheme but a decision will not be made until nearer the Budget.

A Treasury source said that the government is giving "proper" consideration to the issue and is "actively" examining how the package of help for remote areas would work.

In the coalition agreement, the government committed to "investigate measures to help with fuel costs in remote rural areas, starting with pilot schemes". The measure was also contained in the Liberal Democrat manifesto at the general election.

Scottish finance secretary John Swinney has written to Chancellor George Osborne, calling on him to tackle rising fuel prices.

He wrote: "Coupled with the UK government's recent VAT rise, these record fuel costs are putting a huge and unnecessary amount of pressure on our communities and on vital sectors of the Scottish economy, and risk choking the recovery we are building in Scotland."With a further rise in duty scheduled for April, Westminster must take urgent action to tackle this."

The government began talks with the European Commission last year to introduce a pilot scheme to give a discount on fuel duty of up to 5p per litre on petrol and diesel in the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly.

It can only be introduced if the government can persuade the Commission that it would not break competition laws.